Uniqlo Pressured to Halt Russia Sales After CEO Vows to Stay

Uniqlo owner Fast Retailing Co. faces mounting pressure over its plans to keep operating stores in Russia, even as other global retailers including fast-fashion rivals Hennes & Mauritz AB and Zara’s Inditex SA pause sales in the country over President Vladimir Putin’s invasion of Ukraine.

Tadashi Yanai, chief executive officer of Asia’s largest retailer, said in an interview with the Nikkei newspaper earlier this week that clothing was a necessity and that “the people of Russia have the same right to live as we do.” While firms including Apple Inc. and McDonald’s Corp. pull back from Russia, Fast Retailing said last week it is donating clothes and other items to Ukrainians who’ve fled and $10 million to the UN’s refugee agency.

The comments have drawn criticism, with some social media users pushing the hashtag #BoycottUNIQLO. Ukraine’s ambassador to Japan, Sergiy Korsunsky, also criticised the retailer on Twitter. In an interview with Bloomberg News on Wednesday, Korsunsky said “the more companies that withdraw from Russia, the better.”

“Cutting business from Russia is not a loss, it’s an investment,” Korsunsky said. “If you prove some sacrifice of profit for a period of time, you encourage Russia to become a normal member of nations and you’ll get much more profit in the future.”

Fast Retailing, which found global success with its affordable and fashionable Uniqlo clothing, entered the Russian market in 2010. The Tokyo-based retailer operated 50 stores in the country as of Feb. 28, its largest number of outlets outside of Asia, according to its website. The company set up a joint venture with Mitsubishi Corp. in 2017 to further expand in the Russian market.

A spokeswoman at Fast Retailing declined to comment on the ambassador’s remarks, and confirmed that there’s currently no change to their operations in Russia.

While there’s been a rush of US and European companies boycotting sales and operations in Russia, that hasn’t been matched by corporations in Japan and other parts of Asia. For Yanai, Russia’s war against Ukraine comes at a time when he’s seeking to expand Fast Retailing’s presence in Europe and reduce the company’s dependence on Japan, where the population is getting older.

Inditex announced on Saturday the temporary closing of all of its 502 stores in the country, of which 86 are its Zara brand. The company said it “cannot guarantee the continuity of operations and trading conditions.” Swedish clothing retailer H&M also paused sales in Russia, where it operates 155 stores.

Fast Retailing could face growing calls to not only pull out of Russia, but other markets, according to Oshadhi Kumarasiri, an analyst at LightStream Research. He warned in a research note this week that fallout could be seen in North America and Europe, which bolstered Fast Retailing’s business during the latest quarter.

Along with the exodus by companies, Russia’s invasion of Ukraine has drawn international condemnation and triggered trade restrictions and financial penalties against Moscow, leading to a dramatic reversal of three decades of Western investment following the collapse of the Soviet Union in 1991.

After days of criticism on social media, more companies with larger or more entrenched operations in Russia are starting to exit as the death toll rises in Ukraine and millions of refugees flee. McDonald’s, Coca-Cola Co. and Starbucks Corp. are the latest to join mainly American and European global businesses by temporarily halting operations in Russia amid an intensifying backlash since the invasion started almost two weeks ago.

The Japanese government has followed the line of the US and much of Europe in imposing a raft of sanctions, including freezing the assets of a number of Russian officials and oligarchs, as well as those of financial institutions including Russia’s central bank.

Yet so far, Japanese businesses have been more muted. Toyota Motor Corp. and Honda Motor Co. said they’re halting vehicle shipments to Russia, mostly citing logistical difficulties, while a business lobby warned trading giants Mitsubishi Corp. and Mitsui & Co. not to rush into exiting from a Russian oil and gas project.

Yanai has a track record of questioning whether companies should be pressured into making political choices.

In April last year, Fast Retailing’s billionaire founder chose not to comment on the issue of sourcing cotton from China’s Xinjiang region, a month before it was revealed the US had earlier blocked a shipment of Uniqlo shirts on concerns about forced labor. Yanai said it was a political issue and that the company was diligent about monitoring its factories to ensure that human rights aren’t violated.

Fast Retailing says it will continue working with the UNHCR. In its statement from Friday, the retailer said that “Ukraine and many neighbouring countries experience harsh winters, often with below-freezing temperatures” and that its donations include Uniqlo’s Heattech blankets and innerwear, as well as face masks.

“This seems like a move to please both sides,” Kumarasiri said, adding that the impact on the company’s share price could be significant there’s a wider boycott. Fast Retailing’s stock, which hit a record in February 2021, has lost almost half its value since then.

By Kanoko Matsuyama

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